How to Manage Your Google Ads Budget Effectively

Effectively managing your Google Ads budget means setting well-defined business goals, creating campaigns that align with those goals, and allocating your budget to the right keywords and strategies. Google Ads budget management involves using Google Ads tools and built-in insights to help you choose the best keywords to target your ideal demographic, getting your ads in front of the right people, at the right time.

What is Google Ads budget management?

Google Ads budget management refers to allocating and controlling how much money is spent on advertising campaigns. When you set up a campaign with Google Ads, you assign an average daily budget, or the amount you’re willing to spend daily. Google may spend slightly more or less on any given day depending on how well your ad performs, but your monthly spend will not exceed your daily budget multiplied by 30.4 (average number of days in a month). 

How to set up and manage your Google Ads budget

Managing your Google Ads budget effectively is key to running successful campaigns without overspending. Knowing how to set your budget, choose the right bidding strategy, and adjust based on performance can help you get the most value out of every dollar you spend. 

Google provides optimization tools like Keyword Planner, Bid Simulators, and Budget Reports, which give real-time insights into campaign performance and spending. Log in anytime to adjust keywords, change bids, or update your daily budget based on your goals.

1. Define your advertising goals and choose your campaign type. 

Set an objective that aligns with your campaign goals. Do you want to increase web traffic? Boost sales? When you create a campaign, select an objective to see the features and settings Google recommends based on your advertising goals. 

After determining campaign objectives, specify a campaign type and choose which networks to have your ads appear on.

2. Choose the right budget type.

Google Ads offers two ways to set your budget: average daily and shared budgets. 

An average daily budget is the average amount you set for each campaign per day. It notes how much you want to spend each day over the month. For example, if you enter your daily budget as $10 per day, Google uses this to pace your monthly spend so you don’t exceed $304 (multiply your daily budget by 30.4). 

A shared budget lets you allocate spending across multiple ad campaigns. Shared budgets are beneficial if you manage multiple campaigns, particularly campaigns with similar goals, as you can effectively maximize performance and ROI toward your goal.

Understanding daily budget and ad pacing 

Google has two spending limits: daily and monthly. Your daily spending limit is the highest amount Google can charge you for a campaign in a single day, calculated as twice your average daily budget. Your monthly spending limit is the maximum amount Google can charge you for a campaign in a given month. Google calculates it as 30.4 times your average daily budget. 

Once your budget is set and your campaign is live, Google spreads your spending throughout the day or month to ensure you don’t exceed your average daily budget by the end of the month. Google calls this process ad pacing, and it’s helpful for monitoring and tracking your budget. 

3. Select an appropriate bidding strategy.

When you run ads on Google, you have different ways to bid depending on what you care about most; for example, getting clicks, views, impressions, or conversions. 

Google offers two categories of bidding: manual bidding and automated bidding. Manual bidding means you set your own cost-per-click (CPC) for each keyword or ad group, monitor, and adjust as you want. Automated bidding means Google adjusts your bids automatically based on your goals. Within automated bidding are several specific strategies, like Maximize Conversions, Target CPA, and Maximize Clicks. Known as Smart Bidding strategies, these use Google’s AI to optimize bids and improve results like conversions or sales, depending on your business goal.

4. Monitor and adjust spending.

In the Budget section, keep an eye on your budget and ad performance. Google provides insights into how much you've spent, what results you're getting, and how your budget is progressing throughout the month. These tools are ideal for analyzing data to present to your marketing team. 

Google Ads gives you full control to make changes anytime. You can increase or decrease your daily budget, switch bidding strategies, update keywords, or pause underperforming campaigns. Reviewing and adjusting regularly ensures your budget is being used effectively.

Decide on a monthly budget and stick to it, using Google Ads analytics and reports to monitor performance. Google Ads automatically adjusts your daily spending limit for a month to prevent overspending, so it’s smarter to manage your budget month by month. 

5. Optimize budget distribution across campaigns.

When distributing funds across campaigns, allocate more budget to campaigns that are performing well and contributing to your goals. Distributing your ad spend strategically across campaigns ensures efficient use of funds and better ROI.

With shared budgets, Google automatically shifts funds to higher-performing campaigns throughout the day. If you link your shared budgets with portfolio bid strategies, you can manage bids and budgets across multiple campaigns that share the same goals, which helps in maximizing performance and ROI.

Budget reports offer insights into your spending patterns, projected costs, and budget use. 

Advanced budget optimization strategies

By adjusting when, where, and how your ads appear and managing how your budget is paced, you can improve performance, control costs, and reach your most valuable audiences more efficiently. 

Use bid adjustments for better budget control.

Bid adjustments optimize your ad spend and improve your ROI by allowing you to tailor your ads to show more frequently based on location, time, and device. You can also modify bids based on how your ads perform. If clicks from mobile users are more valuable to your business, you can raise your bid for mobile searches. A $1 bid with a 20 percent mobile adjustment would become $1.20 for those searches. 

These adjustments help you control where and when your ads appear without changing your daily budget. 

Implement automated budget pacing.

Automated budget pacing involves distributing your advertising budget evenly over a specified period, which prevents early overspending and keeps your ads visible to your target audience. 

You can manage automated pacing using scripts or third-party tools. With Google Ads scripts, you can track daily or monthly spend, automatically pause campaigns that spend too quickly, or adjust daily budgets to stay on target. Scripts can send email alerts when a campaign falls behind, allowing you to take quick action. These tools require knowledge of JavaScript, so if you want a no-code option, third-party tools like Supermetrics, Optmyzr, and AgencyAnalytics offer built-in pacing reports and tools to help you monitor spending across campaigns, track performance, and reduce the risk of over- or underspending.

Run A/B tests for budget efficiency.

Conducting A/B tests on your ads helps you better understand your audience and the market by splitting traffic between two ad versions and comparing the results to determine which ad performed best. These insights lead to data-driven decisions that help maximize your ad spending since you know what works and what doesn’t. 

In Google Ads, you can run these tests directly in the platform via Google Experiments to see which version leads to better outcomes, such as higher click-through rates or more sales. 

If you don’t have a campaign type compatible with Experiments, manually test in Google Ads by duplicating a campaign to test changes. Copy and paste your existing campaign, then edit the copy to change one thing you want to test. Remember, it also copies your budget, so adjust it to stay within your limits. Run both campaigns simultaneously, monitor their performance, and compare results to see which works better. 

Go further with Google Ads

Take your ad optimization skills one step further by leveraging your Google Analytics account insights and setting up budget alerts in Google Ads. These steps are helpful if you’re managing multiple campaigns and want to catch performance issues early.

Integrate Google Ads with Google Analytics.

Link Google Analytics to your Google Ads account to track conversions more consistently, see how your ads perform, and re-target users based on how they interact with your website or app. If visitors leave your site after clicking an ad, it could mean your keyword isn’t specific enough to what you want users to do. Choose different keywords and save money on keywords that don’t lead to conversions. 

When you meet the needs of users visiting your site by adjusting the relevance of your keywords, you’ll also raise your ad’s Quality Score and lower your average CPC. 

Set up budget alerts in Google Ads.

Use budget alerts to track spending and adjust budgets as needed. Increase your budget if you see strong ROI, launch new offerings, or expand reach. Decrease it if the ROI is low, costs need trimming, or traffic is seasonally down. Access your Manager Accounts (MCC) notifications page to set different types of alerts. 

Troubleshoot common budget issues

Troubleshooting common budget issues in Google Ads helps you keep campaigns running smoothly. Some issues can lead to poor conversions, while others affect the competitiveness of your ads. When deciding what action to take, ensure your campaign goal and bid strategy align with your advertising goal. 

• Ads stopping early in the day: Ads stopping before the end of the day can happen when a campaign uses its daily budget too quickly, particularly during high-traffic times. Consider raising your budget, narrowing targeting, or using automated bidding and innovative pacing tools to spread spend more evenly.

• Limited campaign: Limited campaign status occurs when budgets are too low to support the reach or number of keywords you’re targeting. Check the budget report to get a clearer picture of your campaign’s spending with its average daily budget to assess how this has affected your spend limits and performance. Increase your budget to serve ads throughout the day. 

• Overspending: Overspending can result from targeting too many broad or irrelevant keywords, poor ad extensions use or missing extensions, or slow or mismatched landing pages. Check your search terms report, add negative keywords, and use relevant ad extensions to prevent issues affecting your ad’s effectiveness. 

• Competition issues: If you’re using manual bidding, you may need to adjust your budget to stay competitive, especially in high-demand markets. Try automated bidding as it bids in real time based on factors like device, location, time, and search intent, removing guesswork and improving results.

• High competition can increase rates: High competition for ad space can drive up costs, meaning your budget may not stretch as far during peak periods or in competitive industries. Target lower competition, specific keywords. You’re more likely to get your ad in front of users who are ready to take action.

Learn more about online marketing on Coursera

You can effectively manage your Google Ads budget by setting clear goals and using strategies and tools to monitor, adjust, and optimize your budget. Take advantage of the convenience and effectiveness of online courses to learn about digital and online marketing. Enroll in an online course to gain in-demand skills for managing your Google Ads budget. 

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